SMI Loan http://smi-loan.com/ Wed, 23 Nov 2022 15:00:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://smi-loan.com/wp-content/uploads/2021/05/smi-loan-icon-150x150.png SMI Loan http://smi-loan.com/ 32 32 Women’s Choir Ensemble to Sing at Next Ladies Club Luncheon | Glade Sun https://smi-loan.com/womens-choir-ensemble-to-sing-at-next-ladies-club-luncheon-glade-sun/ Wed, 23 Nov 2022 15:00:00 +0000 https://smi-loan.com/womens-choir-ensemble-to-sing-at-next-ladies-club-luncheon-glade-sun/

The next meeting of the Fairfield Glade Ladies Club will take place on December 7 at the Center at 7827 Stonehenge Dr.

Doors open at 10 a.m. and the business meeting starts at 11 a.m.

The Plateau Women’s Chorus will entertain with a Holiday Tidings musical program.

December’s service project is Peavine Care Center, a food pantry on Peavine Rd. that serves starving families in Cumberland County. Cash donations are requested to help purchase items not usually donated.

Lunch is $18; the menu is pork tenderloin with cranberry glaze on a bed of long-grain wild rice, mixed vegetables, a roll and peppermint cake for dessert. The vegetarian option is stuffed portabello mushrooms with long-grain wild rice, mixed vegetables, a roll, and peppermint cake.

Online lunch reservations are available on a first-come, first-served basis from November 28 at 8 a.m. to November 30 at 10 a.m. at ffgladiesclub.com.

For those without internet, reservations can be made over the phone from 8 a.m. to noon on Nov. 28 by calling 931-200-9749.

Cancellations must be made by 10 a.m. on December 2 to avoid financial liability for the meal. Payment in cash or by check (payable to FGLC) is due on the day of the meeting. No credit card accepted.

Check out upcoming travel opportunities at the Travel Committee information table or make reservations. Members are reminded to bring cash or checks to purchase metallic ribbon Christmas bows from the Ways and Means Committee.

Open to all women living or owning property in Fairfield Glade, the Ladies Club is a 501(c)(3) non-profit organization, established exclusively for charitable, religious, educational and scientific purposes. Its mission is to provide educational and charitable giving, direct community service and social opportunity to its members.

Visit ffgladiesclub.com for more.

]]>
Student loan defaults could hit historic highs without debt relief: Education Department https://smi-loan.com/student-loan-defaults-could-hit-historic-highs-without-debt-relief-education-department/ Tue, 22 Nov 2022 14:45:59 +0000 https://smi-loan.com/student-loan-defaults-could-hit-historic-highs-without-debt-relief-education-department/

A record number of student borrowers could default without federal student loan forgiveness, an Education Department official has warned. (iStock)

Student loan default could become a reality for millions of borrowers if President Joe Biden’s student loan forgiveness plan does not materialize, according to an Education Department official.

“Unless the [Education] The department is authorized to provide debt relief, we anticipate that there may be a historically large increase in the amount of federal student loans in arrears and defaults as a result of the COVID-19 pandemic,” said said James Richard Kvaal, Undersecretary for Education in the Department of Education. in a court case.

The filing comes shortly after a block on the federal student debt relief plan was extended by the 8th U.S. Circuit Court of Appeals, in an ongoing lawsuit filed against the Department of Education by six states.

The student loan relief plan provides up to $10,000 in federal loan forgiveness per borrower and up to $20,000 for those who used Pell Grants in college.

But if the plan is permanently overturned by the court system, Kvaal warned that borrowers who would have had all of their student loan debt wiped out would be hit hardest. That’s 18 million borrowers, the undersecretary said.

According to research by Morning Consult, the current federal student loan payment freeze is set to expire on December 31.

If you have private student loans that do not qualify for federal student loan relief, you may consider refinancing them at a lower interest rate to lower your monthly payments. You can visit Credible to find your personalized interest rate without affecting your credit score.

TEXAS FEDERAL JUDGE BLOCKS BIDEN’S STUDENT LOAN FORGIVENESS

What happens if you default on a student loan?

Defaulting on a student loan, Kvaal says, typically means borrowers owe any remaining balance plus accrued interest immediately and lose many federal benefits like the ability to apply for a new repayment plan that can lower their payments. monthly.

Borrowers in default may even have their wages garnished and denied further student aid. Borrowers are typically in default after 270 days of missed payments, according to StudentAid.gov.

“The consequences of defaulting on federal student loans are severe,” Kvaal said.

If you are having difficulty repaying your student loan, you may consider refinancing your private student loans to lower your interest rate and monthly payments. Visit Credible to compare interest rates and find the right one for you.

BIDEN ADMINISTRATION REVISES STUDENT LOAN FORGIVENESS FOR CERTAIN BORROWERS

Will the federal student loan pause be extended?

The Biden administration previously said the pause on federal student loan repayments would be extended one final time through Dec. 31, and borrowers should expect to resume payment in January.

However, as Biden’s student loan forgiveness plan faces legal challenges, some advocates have called for an extension of the payment break. Student Borrower Protection Center (SBPC) Deputy Executive Director Persis Yu said in a statement that the Federal Court of Appeals’ recent ruling was “a tragic reminder of the growing grip vested interests have on our legal system”.

“The Biden administration can no longer resume payments on January 1,” Yu said. “He must use all his tools to fight to ensure borrowers receive the debt relief they need.”

If you have private student loans, these will not be eligible for federal loan forgiveness. However, you can consider refinancing your loan at a lower rate to help you save on your monthly payments. Visit Credible to speak with a student loan refinancing professional to see if this option is right for you.

BIDEN ADMINISTRATION ANNOUNCES CHANGES TO INCOME-DRIVEN STUDENT LOAN REPAYMENT PLAN

]]>
Renters Beware: When Your Deposit Lacks Security | Kramer Levin Naftalis & Frankel LLP https://smi-loan.com/renters-beware-when-your-deposit-lacks-security-kramer-levin-naftalis-frankel-llp/ Tue, 22 Nov 2022 02:40:50 +0000 https://smi-loan.com/renters-beware-when-your-deposit-lacks-security-kramer-levin-naftalis-frankel-llp/

Insight

Security deposits are a fundamental landlord protection under leases, with tenants expecting the deposits to be returned when the lease expires. Although landlords frequently think about how to protect their rights to the security deposit if the tenant declares bankruptcy, a recent decision highlights the risk for tenants if the lessor is instead the debtor in bankruptcy proceedings. The question arises because of the broad scope of what is included in the “ownership of a bankruptcy estate” and under what circumstances the non-debtor (here, the tenant) has an ownership interest in the security deposit. in cash or is simply a creditor with a prior unsecured claim against the debtor-lessor. Notably, under section 541(d) of the Bankruptcy Code, property held by a debtor in trust for a non-debtor does not become the property of the debtor’s bankruptcy estate to the extent of the beneficial interest of non-debtor parties in such funds. Trust rights may arise by statute or by agreement. A recent court ruling in New York highlighted the importance of including explicit language in the lease document to ensure that a tenant will receive their cash security deposit when the lease expires.

In 10FN, Inc. v. Cerberus Business Fin., LLC et al., Case No. 21-CV-5996-VEC (SDNY Oct. 18, 2022), the U.S. District Court for the Southern District of New York (the court) ruled that the nondebtor tenant’s $271,000 security deposit amounted to an unsecured loan where neither the commercial lease nor applicable state law expressly requires the commercial landlord to hold the security deposit in trust for the benefit of the tenant. Consequently, the tenant was unable to seek recourse against the secured creditors (who had swept away the bank accounts in which the security deposit was held). The only avenue of recovery available to the tenant was as a general unsecured creditor against the landlord’s Chapter 7 bankruptcy.

Background

In 2016, Network Innovations, dba Nitel Inc. (the tenant) entered into a commercial sublease (sublease) with Rocket Fuel Inc. for office space located in Chicago, IL, and paid a security deposit in cash of $271,000.00 (the security deposit). The terms of the sublease provided that it was governed by Illinois law and that the tenant had the right to recover the security deposit within 30 days of the expiration of the sublease (provided that the tenant is not in default of payment of the rent), and in the event of default, the landlord could deduct from the security deposit. However, the sublease was silent as to the landlord’s obligations regarding the disposition of the security deposit during the term of the sublease.

While the sublease was in effect, Sizmek DSP Inc. (the debtor) acquired Rocket Fuel, which was funded by loans from Cerberus Business Finance LLC and PEPI Capital LP (together, the secured lenders). As part of the transaction, the Debtor signed certain account control agreements authorizing the Secured Lenders to control and sweep the accounts of the Debtor.

Shortly before the bankruptcy filing, the secured lenders withdrew all money from the debtor’s accounts, including some or all of the security deposit.

In March 2019, the debtor commenced Chapter 11 bankruptcy proceedings, which was later converted to Chapter 7, In re Sizmek Inc., No. 19-10971 (Bankr. SDNY filed March 29, 2019). The debtor rejected the sublet in June 2019, after which the tenant made several unsuccessful attempts to recover the security deposit in the bankruptcy case. In June 2021, the tenant filed a lawsuit against secured creditors, asserting claims for conversion and unjust enrichment. The Complaint was later amended to include conversion and negligence claims against several of the Debtor’s officers (the Executive Defendants).

In April 2022, the Secured Lenders and Executive Defendants filed motions to dismiss the Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to which Plaintiff objected.

Court decisions

Ultimately, the Court granted the motions to dismiss in their entirety, dismissing each of the Tenant’s claims on the merits.

As a preliminary matter, the Court ruled that New York law would apply to determine whether the elements of the three tort actions had been properly pleaded, but that Illinois law applied for purposes of interpreting the provisions of the sublease. The Court has analyzed each request in this context.

With respect to the conversion application, the Court ruled that the tenant failed to adequately establish his right of possession or interest in the security deposit – a key element of a conversion application. The Court began its analysis by noting that the application for conversion rested on the tenant’s assertion that the landlord was required to hold the security deposit in trust for the benefit of the tenant. Since the sublease imposed no such obligation on the landlord, the Court turned to Illinois law. Although Illinois law imposes this obligation on Residential owners, the Court concluded that no such requirement exists with respect to commercial owners.

Rather, the Court interpreted Illinois law – and more specifically, dictated stated in a decision of the Court of Appeals for the Seventh Circuit – to mean that the security deposit is equivalent to an unsecured loan from the tenant to the landlord. This conclusion was based on the commercial owner’s lack of obligation to separate the security deposit—both in state law and in the sublease—combined with the terms of the sublease expressly allowing the owner to draw on the funds if the lessee defaults. Thus, the refusal of the debtor-landlord to return the security deposit to the tenant was analogous to the refusal of a borrower to repay a loan to a lender (here, the tenant). Therefore, the tenant was limited to seeking recovery of the security deposit as a general unsecured creditor in the landlord’s bankruptcy.

The negligence action against the Executive Defendants also failed. To make a claim for negligence, a plaintiff must allege, among others, that the defendant has breached a duty to the plaintiff. Since the Court had already found that there was no obligation to separate the security deposit and hold it in trust, the negligence action also failed.

The final unjust enrichment claim against the secured lenders also failed. An action for unjust enrichment is generally barred where there is a valid and enforceable agreement governing the subject matter of the dispute (even if the action is brought against a third party to the agreement). Here, the sublet governed the security deposit dispute.

Why this case is interesting

This case serves as a warning to commercial tenants: if the commercial lease and/or applicable law does not require the landlord to segregate and hold the security deposit funds in trust for the benefit of the tenant, the security deposit may be treated as an unsecured deposit. loan to owner in bankruptcy. In other words, the debtor-lessor simply has an obligation to repay the security deposit, which is no different from any other general unsecured claim that a seller, supplier or other party to the contract may have against a debtor and his bankruptcy estate. The special protections of Section 541(d) of the Bankruptcy Code – which limit a debtor’s right to assert that property held in trust for the benefit of a non-debtor belongs to the bankruptcy estate – does would not apply. Thus, if the debtor-lessor has filed for bankruptcy, the tenant will have trouble getting his security deposit reimbursed.

Accordingly, this decision underscores the importance of setting out, in express terms, the treatment and disposition of the parties’ obligations with respect to security deposits (or other payment obligations) under a rental, particularly where the applicable law is silent on the issue. And even if applicable state law provides for the funds to be held in trust, adding trust language to the applicable lease mitigates the risk of the funds becoming part of the debtor’s estate subject to the rights of the lenders. debtor’s guarantees.

Note that this case and these tips do not apply directly to a security deposit in the form of a letter of credit, because the tenant is the “account debtor” for the letter of credit and the letter of credit is an obligation of the issuing bank, rather than the property of an owner-debtor under its control. Any drawing under the letter of credit is also subject to compliance with the conditions for doing so. However, if the owner-debtor has a residual interest in the proceeds of the letter of credit, or if he has drawn on the letter of credit but has not used the funds, then the cash proceeds drawn by the owner would be subject to the same risk as a cash payment.

[View source.] ]]>
November 21, 2022 – Lending Rates Rise – Forbes Advisor https://smi-loan.com/november-21-2022-lending-rates-rise-forbes-advisor/ Mon, 21 Nov 2022 15:37:46 +0000 https://smi-loan.com/november-21-2022-lending-rates-rise-forbes-advisor/ Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

The average interest rate on 10-year fixed-rate private student loans jumped last week. For borrowers looking for private loans to fill gaps to pay higher education expenses, rates remain relatively low for borrowers with strong credit.

According to Credible.com, from November 14-19, the average fixed interest rate on a 10-year private student loan was 7.76%. It was 9.06% on a five-year variable rate loan. This is for borrowers with a credit score of 720 or higher who have prequalified in Credible.com’s student loan marketplace.

Related: Best Private Student Loans

Fixed rate loans

Last week, the average fixed rate on a 10-year loan jumped 0.14% to 7.76%. The average was 7.62% the previous week.

Borrowers looking for a private student loan can now qualify for a higher rate than they would have at this time last year. At this time last year, the average fixed rate on a 10-year loan was 6.40%, 1.36% lower than the current rate.

Let’s say you funded $20,000 in student loans at today’s average fixed rate. You’d pay about $240 a month and about $8,815 in total interest over 10 years, according to Forbes Advisor’s student loan calculator.

Variable rate loans

Last week, five-year variable student loan rates rose to 9.06% from 6.12% the previous week.

Unlike fixed rates, variable interest rates fluctuate over the term of the loan. Variable rates can start lower than fixed rates, especially during times when rates are generally low, but they can increase over time.

Private lenders often offer borrowers the option of choosing between fixed and variable interest rates. Fixed rates may be the safest bet for the average student, but if your income is stable and you plan to pay off your loan quickly, it might be beneficial to choose a variable loan.

Financing a private loan of $20,000 over five years at 9.06% would yield a monthly payment of approximately $416. A borrower would pay $4,945 in total interest over the life of the loan. Keep in mind that since the interest rate is variable, it could change monthly.

Related: How to Get a Private Student Loan

Comparison of Private Student Loans

First, look at the overall cost of the loan. Consider both the interest rate and the fees. Also, look at the type of help each lender offers if you are unable to pay your payments.

Remember that those with good or excellent credit usually get the best rates.

How much should you borrow? Experts generally recommend not borrowing more than you will earn in your first year out of college. How much can you borrow? Some lenders cap the amount you can borrow each year, while others don’t. When shopping for a loan, let lenders know how the loan is disbursed and what costs it will cover.

How to get a private student loan

Before turning to a private student loan, consider a federal student loan as your first option. Interest rates on federal student loans are generally lower. Federal student loans also tend to have much more generous repayment and forgiveness options. Still, if you’ve reached federal student loan borrowing limits or don’t qualify, private student loans may be a good solution.

To obtain a private student loan, you will usually need to apply directly with a non-federal lender. You can find private student loans from banks, credit unions, and online entities. Nonprofit organizations, state agencies, and colleges also offer loans.

If you are an undergraduate student with a limited credit history, you will usually need to apply with a co-signer who can meet the borrowing requirements of the lender.

Here’s what to consider when applying for a private student loan:

  • Make sure you qualify. Private student loans are credit-based, and lenders typically require a credit score in the 600s. That’s why having a co-signer can be especially beneficial.
  • Apply directly to lenders. You can apply directly on the lender’s website, by mail or by phone.
  • Compare your options. Look at what each lender offers and compare the interest rate, term, future monthly payment, origination fees and late fees. Also check to see if the lender offers a co-signer release so that the co-borrower can potentially opt out of the loan.

How lenders determine your rate

The rate you receive varies depending on whether you get a fixed or variable loan. Rates are partly based on your creditworthiness – those with higher credit scores often get the lowest rates. But your rate is also based on other factors. Credit history, income, and even the degree you’re working on and your career can all play a role.

]]>
The BNPL party is over and regulation is the least of its worries https://smi-loan.com/the-bnpl-party-is-over-and-regulation-is-the-least-of-its-worries/ Mon, 21 Nov 2022 06:33:27 +0000 https://smi-loan.com/the-bnpl-party-is-over-and-regulation-is-the-least-of-its-worries/

After operating for more than a decade in the regulatory blind spot of the financial industry, the day of reckoning is near for the buy it now, pay later (BNPL) industry.

This could not have come at a worse time for BNPL operators whose operations have been hit by high interest rates.

This is a real game-changer for a sector that has until now benefited from optimal conditions to prosper: a fiery regulatory environment and ultra-low interest rates. Without the regulations that require BNPL to be classified as credit, operators have been able to sign up new customers with little or no credit checks.

The government is considering new credit laws that will apply to Afterpay and other BNPL players.Credit:Louie Douvis

This means that the addressable market for BNPL is virtually everyone.

Merchants had no choice but to follow customers, who were drawn to a payment method that satisfied the desire for instant gratification and easier budgeting. The BNPL has become an enduring part of the payments landscape for Australians – and while that won’t change, the economics of BNPL players will.

To say that the BNPL simply fell through the cracks of the regulatory net of the Australian Securities and Investments Commission (ASIC), the Reserve Bank and the Federal Government would be a generous interpretation. There was a distinct reluctance on the part of regulators to intervene in the denial of music once the BNPL party started.

This ‘Wild West’ approach was justified on the grounds that the industry was too small and that onerous regulation would ‘stifle innovation’. Then there was the fact that the BNPL operators ‘technically’ did not extend credit and therefore did not need to be caught under the laws governing credit.

A 2020 Senate investigation into fintechs found there was no need to treat BNPL like credit card providers. Both ASIC and the Reserve Bank have taken a look at the BNPL industry and have also been unresponsive to the regulations, opting instead to pin it or give it a shot. foot in the box.

This is despite increased noise from consumer groups around the difficulties faced by BNPL customers.

]]>
FTX’s failure and SoftBank’s struggles point to a hangover in tech investing https://smi-loan.com/ftxs-failure-and-softbanks-struggles-point-to-a-hangover-in-tech-investing/ Thu, 17 Nov 2022 10:55:28 +0000 https://smi-loan.com/ftxs-failure-and-softbanks-struggles-point-to-a-hangover-in-tech-investing/

The encounter is a dream come true for the scriptwriters who are already hard at work on the film version of events. In 2021, Sequoia Capital, a large venture capital (VC) firm, made its first investment in FTX, a now bankrupt cryptocurrency exchange. To publicize the agreement, Sequoia posted part of the transcript of the virtual pitch meeting on its website. Sam Bankman-Fried, the founder of FTX, explained that he wanted the company to be a “superapp” where “you can do whatever you want with your money from within FTX.” Sequoia investors swooned. “Love this founder,” one said in a chat feature; “Yes!!!!” said another. An FTX executive who sat next to Mr. Bankman-Fried during the pitch noticed another detail: “Turns out that motherfucker was playing ‘League of Legends’ the whole meeting.”

It also turns out that ftx was doing more with the customers’ money than it promised. His disappearance forced Sequoia to write down its $210 million investment. It will also hurt another beleaguered backer. On November 11, SoftBank, a Japanese conglomerate turned technology investor, announced that its Vision funds, which focus on venture capital investments, had lost about $10 billion in the three months to September. The company is expected to write off about $100 million of its investment in ftx.

This adds to a series of bad news for tech investors. Since the tech downturn began last December, many Silicon Valley darlings have gone bankrupt, including Fast, an online payment company, and LendUp, a payday loan provider. There has also been a flurry of other explosions in cryptoland, such as the failure of Three Arrows Capital, a hedge fund, and Voyager Digital, a lender.

Venture capital investing is all about taking risks. An investor can expect only two companies to succeed out of a portfolio of ten, hoping that the outsized returns from the stars compensate for the misfires. Usually the risk is greater when companies are young and cheap. But FTX’s valuation in January was $32 billion. Many believe that the industry’s inability to notice that something was wrong is symptomatic of larger issues. “Venture capital is in la-la land,” says one industry veteran. There are three areas of risk: governance, due diligence and a focus on growth at all costs.

The problems are the hangover from years of explosive growth. Today, the market is flat due to high inflation, rising interest rates and the war in Ukraine. But in 2021, venture capital investment hit a record $630 billion, double the previous record set the previous year. Part of the reason for the growth was new entrants. SoftBank raised its first venture capital fund, worth $100 billion, in 2017. After that, crossover investors (which back both public and private companies), such as Tiger Global and Coatue, also started looking for more deals with startups.

The new entrants have created fierce competition and injected much more capital into the market. This meant that some investors “started to streamline a set of governance structures that would have been unthinkable before,” says Eric Vishria of Benchmark, a venture capital firm. In the past, venture capitalists were expected to sit on the boards of companies in which they made significant investments. This is no longer the case. FTX had no investors on its board. Tiger, for example, has invested in around 300 companies in 2021 with few board seats in return.

Due diligence is another issue. Before the boom years, investors had weeks to scrutinize a company’s founders and grill customers. As competition intensified, lead times got shorter. Some hot startups only gave investors 24 hours to make an offer. For many, the risk of missing the next Google was too great. As a result, much of the due diligence went out the window. Instead, some investors have used the involvement of big companies, such as Sequoia or Andreessen Horowitz, as a shortcut test. If a renowned venture capital firm invested in a startup, according to the theory, it had to be a safe bet. This logic is currently being revised. (Sequoia says it performs “rigorous” due diligence on all companies in its portfolio.)

The industry’s obsessive focus on growth presents the final problem. Many investors are pushing startups to grow at all costs, especially after major funding rounds. But not every company can truly sustain this supercharged growth model, argues Mark Goldberg of Index Ventures, another venture capital firm. Startups that get swept up risk falling flat. This includes companies such as WeWork, a flexible office rental company that halted its initial public offering in 2019, and Opendoor, a real estate company that has been stung by falling house prices this year. “It’s like giving kerosene to cars,” Goldberg adds. “If you do that, bad things will happen.”

The market slowdown has, for now, relieved some of the pressure on the industry. In most cases, investors say they now have more time for due diligence. Governance could also improve, thanks to FTX’s setbacks and the fact that the crisis has given investors more bargaining power. But, as the recession drags on, more Silicon Valley startups will struggle to raise the capital they need. The hangover of 2021 has only just begun.

To stay up to date with the biggest stories in business and technology, sign up for the Conclusionour weekly subscriber-only newsletter.

© 2022 The Economist Newspaper Limited. All rights reserved.

From The Economist, published under licence. Original content can be found at https://www.economist.com/business/2022/11/17/ftxs-failure-and-softbanks-struggles-point-to-a-tech-investing-hangover

]]>
As recession looms, UK businesses send loan SOS https://smi-loan.com/as-recession-looms-uk-businesses-send-loan-sos/ Thu, 17 Nov 2022 06:02:00 +0000 https://smi-loan.com/as-recession-looms-uk-businesses-send-loan-sos/

By Sinead Cruise, Iain Withers and Lawrence White

LONDON (Reuters) – As inflation soars and recession looms, many British businesses are struggling to secure affordable bank finance, putting pressure on the beleaguered British government as it unveils a budget aimed at to restore economy.

British fruit grower Hall Hunter is one of thousands of businesses in Britain feeling the pressure, forcing owner Harry Hall to consider the drastic step of lending to his own successful business to supplement his expensive bank loans.

“I’m probably going to be the bank,” said Hall, who can’t get loan product from his bank to offset his high borrowing costs. He told Reuters he would likely inject some of his personal wealth into his business to protect it from inflation rates of 11.1% and a recession that could last up to two years.

Banks are increasingly wary of extending credit to small businesses, according to data compiled by Reuters and interviews with lenders and business leaders, as rising costs of debt, labor and raw materials puts the business case for lending to these companies under unprecedented pressure.

Lenders expect the supply of credit to smaller businesses, with an annual turnover of less than £1m, to fall 10.9% in the last three months of this year, according to a report. Bank of England (BoE) survey published last month.

It could spell trouble for new Prime Minister Rishi Sunak and Finance Minister Jeremy Hunt as they announce a tough new fiscal plan on Thursday, seeking to stabilize the economy after their short-lived predecessors sparked chaos in markets financiers with unfunded tax cut plans.

Any slump for Britain’s smaller businesses, which often lack the scale to pass on cost rises to customers as easily as their larger rivals, could deliver a further blow to the economy.

These businesses account for 48% of private sector employment and around £1.6 trillion, or 36% of turnover, according to the Federation of Small Businesses (FSB), citing government data that defines small businesses as with up to 49 employees.

FSB Chairman Martin McTague told Reuters he met with Sunak and Hunt last Friday to demand new tax support for small businesses, including relief from asset sales and research and tax credits. Development.

“How are we going to get out of this hole if it’s not small businesses? The sectors that have been hit hardest by the pandemic are having a hard time trying to get banks to support them,” he said. he declares.

‘MAKE OR BREAK’ FOR THE ECONOMY

Banks continue to lend, but the higher relative risks and costs associated with funding smaller businesses, many of which may not survive, mean they often have no choice but to turn them away, four said. sources from the banking sector.

Stephen Pegge, head of trade finance at banking lobby group UK Finance, pointed out that small and medium-sized enterprises (SMEs) were getting credit more widely – banks lent £6.5bn to businesses with less than £25m pounds of turnover in September, BoE data shows.

Loans are definitely flowing in,” added Pegge. “But there’s no doubt that small businesses now have less ability to increase their borrowing because you have a slowing economy.”

Indeed, UK small businesses are seeing their access to credit at its worst level since 2015, according to a quarterly FSB survey of 1,383 small business owners.

Forty-two percent of finance applications in the third quarter failed, compared to 39% in the second quarter of the year, according to the survey, while one in five companies seeking finance received loan offers at interest rates above 11%.

Many small businesses have yet to repay state-guaranteed loans provided to support them during the COVID shutdowns, making their credit profiles increasingly unattractive. Only £4.7bn of the £46bn lent to small businesses under the Bounce Back Loan scheme had been fully repaid as of July 31, the latest government data showed.

“Business owners need to consider alternative options, one of which is to dip into their own pockets,” said Claire Burden, consulting partner at Evelyn Partners.

Others, like Douglas Grant, CEO of Manx Financial Group, have called for a state-backed permanent loan scheme to protect SMEs, saying it could be the “fundamental make-or-break difference for many businesses and , in turn, our economy”.

BANKS “HAVE NO CHOICE”

Naresh Aggarwal, associate director of policy at the Association of Corporate Treasurers, which represents corporate finance staff, said banks were taking a pragmatic approach to lending as the economy faltered to avoid costly writedowns.

Loans are still being provided and companies that breach debt covenants are being offered waivers, but support comes at a price.

“Lenders are increasing the margin on the loan,” he added. “And for most businesses, they don’t have a choice. It’s not exploitation, it’s risk premium,” Aggarwal said.

Big banks have already set aside hundreds of millions of pounds of extra cash to cover potential losses.

Lloyds, which provided the most detailed breakdown for the July-September quarter, revealed a 30% jump in the most serious category of problem loans in its small business compared to the end of 2021, suggesting why banks could exercise caution.

Businesses of all sizes are already bowing to pressure in greater numbers. The number of quarterly business insolvencies in England and Wales hit its highest level in nearly 13 years in April-June, official data showed last month.

Small businesses face the biggest threat; one in four have considered closing due to mounting cost pressures, according to a survey of 1,930 businesses by investment bank Tide in September.

“Companies are struggling to demonstrate that they are still sound businesses,” said Richard Burge, CEO of the London Chamber of Commerce and Industry. “But they will only be strong if they can access the loans they need.”

(Reporting by Lawrence White, Sinead Cruise and Iain Withers; Editing by Pravin Char)

Copyright 2022 Thomson Reuters.

]]>
Can you use a HELOC for a deposit? https://smi-loan.com/can-you-use-a-heloc-for-a-deposit/ Wed, 16 Nov 2022 19:00:14 +0000 https://smi-loan.com/can-you-use-a-heloc-for-a-deposit/

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

If you need to borrow money for a down payment on a second home, you can use a HELOC to finance it. (Shutterstock)

A home equity line of credit – better known as a HELOC – is a form of revolving credit that allows you to borrow against the equity you have accumulated in your home. With a HELOC, you can borrow up to a certain percentage of your home’s current assessed value after you subtract the amount you still owe on your mortgage.

HELOCs are attractive because you only have to pay interest on the borrowed money during the loan drawdown period before the balance is due. They are also a good option if you want to finance a down payment for another property.

Here’s how HELOC installments work, how to qualify for a HELOC, and some pros and cons of the move.

Although Credible does not offer HELOC, it is easy to compare mortgage refinance rates from multiple lenders.

Can you use a HELOC for a deposit?

Yes, it is possible to use a HELOC for a down payment on a home.

Let’s say you already own a house, but you want buy another property for investment or holiday purposes. It can be difficult to save enough money for that down payment while paying a mortgage on your existing home. In this case, assuming you have enough equity to finance it, you can use a HELOC to borrow the amount of money you need for the down payment.

Keep in mind that HELOCs are generally variable rate loans, which means the interest rate you initially pay may change in the future. A fixed rate mortgage may be a safer option in the long run.

How do you qualify for a HELOC?

To qualify for a HELOC, you must meet certain requirements:

  • Debt-to-income ratio (DTI) — Your DTI ratio looks at how much you’re spending on paying off debt compared to your income. Lenders use this as a guideline when determining whether you should qualify for a HELOC to ensure you don’t go over budget when taking out a new loan.
  • Credit scoreHELOC lenders generally want to see that you have a credit score of at least 680, but some lenders require even higher scores.
  • Equity – Remember that you can only borrow up to a percentage of your home’s current assessed value – usually no more than 85% – after subtracting what you still owe on your mortgage. So if you haven’t been lucky enough to build up enough equity, you might not be eligible for a HELOC.

You can compare withdrawal refinance rates in one place with Credible.

Advantages and disadvantages of using a HELOC for a deposit

Like any loan product, there are both advantages and disadvantages to using a HELOC for a down payment.

Benefits of using a HELOC for a deposit

  • They have lower interest rates than other financial products. HELOCs generally have lower interest rates than unsecured loan products, such as credit cards and personal loans, since your home acts as collateral and secures the loan.
  • You can use a HELOC for more than just a down payment. When you take out a HELOC, you are not limited to using the funds like you would with a mortgage or car loan. For example, if you’re buying an investment property, you can use a HELOC to cover the down payment and any renovations you need to help the house sell for a better price.
  • You only pay for the money you use (plus interest). HELOCs are also flexible in how much you borrow, and you only pay interest on the amount you actually use, not the total amount of credit you have.
  • They can help boost your credit score. If you make regular payments on time and borrow a small portion of the funds you have, having a HELOC can help improve your credit score.

IS INTEREST ON A HELOC DEDUCTIBLE?

Disadvantages of using a HELOC for a deposit

  • HELOCs use your home as collateral. Because a HELOC uses your home as collateral, if you don’t make payments, you could end up losing your home.
  • You will pay additional fees. HELOCs come with a few fees that add to your cost of borrowing, including appraisal, application, and closing fees, as well as annual recurring, inactivity, cancellation, and drawdown fees. .
  • They reduce the equity in your home. When you borrow money against your home equity, you reduce the amount of equity you have until you pay off the loan. This can be problematic if you need to sell your home and the market is down.
  • HELOCs can damage your credit if you miss payments. It’s important to budget your monthly payments well because if you miss a payment, you can hurt your credit score.

Should you use a HELOC for a down payment?

Whether or not using a HELOC for a down payment is the right decision for you depends on your situation as a borrower. Using a HELOC for a deposit can make sense in a few situations:

  • You will generate income from the new house by renting it out.
  • You plan to flip and sell the new home for a profit.
  • You can comfortably afford to make your HELOC and mortgage payments at the same time.

It may not make sense to use a HELOC for a deposit if:

  • You want to buy a vacation home, but you don’t plan to rent it.
  • You have a high DTI ratio or a tight budget and you’ll struggle to balance HELOC payments alongside your first mortgage payments.
  • Your first home isn’t worth as much as when you first bought it.

Other deposit options

If you think a HELOC isn’t right for you, consider these alternative options:

  • Home equity loan — Similar to a HELOC, a home equity loan allows you to borrow against the equity in your home, but you receive the funds in a lump sum and make fixed payments for 30 years, which can make it an easier loan to budget for.
  • Refinancing by collection — With a cash-in refinance, you also get fixed monthly payments and a long-term loan by replacing your existing mortgage with a new, larger mortgage so you can pay off your original loan. You can then use the remaining loan money as a down payment on a second home.

WHAT IS A FIXED RATE HELOC?

If you decide that a cash-out refinance is a better fit for your financial goals, start by comparing mortgage refinance rates from multiple lenders with Credible.

]]>
Student Loan Repayment: Best and Worst Case Scenarios for Planning Your Financial Future https://smi-loan.com/student-loan-repayment-best-and-worst-case-scenarios-for-planning-your-financial-future/ Tue, 15 Nov 2022 19:39:26 +0000 https://smi-loan.com/student-loan-repayment-best-and-worst-case-scenarios-for-planning-your-financial-future/

Alex Brandon/AP/Shutterstock.com

Uncertainty surrounding student loan cancellation, including lawsuits in six states and a ‘stay’ granted by the 8th U.S. Circuit Court of Appeals over the administration’s loan cancellation plan Biden leaves many wondering about their financial future.

Student Loan Forgiveness: Key Deadlines for Winter 2022
Student loans: Will Biden extend repayment pause as relief package stalls?

Andrew Griffith – CPA (NY) and Associate Professor of Accounting at LaPenta School of Business at Iona University – described some of the best and worst student loan forgiveness scenarios and how borrowers can prepare for any eventuality.

Protect your credit in the worst case scenario

“The worst-case scenario,” he said, “is that student borrowers who ask for forgiveness will not have their loans forgiven and may have to pay interest and penalties on any missed payments.” He recommends continuing to make payments, if possible, to avoid this eventuality.

“A potentially negative credit report entry can result in increased interest rates for future borrowing. Some insurance companies consider their subscriber’s credit history when evaluating their rates, and some “Employers don’t offer jobs to applicants with poor credit records. These risks can be avoided by pursuing required payments,” Griffith said.

If you continue to make payments, according to StudentAid.gov, and reach your 120 eligible payments for a direct public loan, you can apply for a forgiveness under the Public Service Loan Forgiveness or Expanded Public Service Loan Forgiveness temporary. This option exists regardless of the status of the legislation under review. Additionally, if you made payments during the payment break – which runs from March 13, 2020 to December 31, 2022 – you may be able to get a refund on those payments. These payments will still count towards your 120 payments required for rebate.

Plan for a more secure financial future

Griffith also spoke about the best case scenario for borrowers. “Their debt is forgiven and none of it is federally taxable income,” he said.

If this happens, borrowers have the opportunity to prepare for a more secure financial future.

“You might want to use your extra money for a luxury trip or a shopping spree. There’s nothing wrong with indulging yourself, but you shouldn’t spend all your freed up money on non-essential things” , advised Aidan Kang, CFA and CEO of House of Debt.

“A budget is a very useful tool,” he said. “It allows you to have a clear vision of your needs, guiding you in your decisions. Review your financial goals and plans. Where did you split your income? What other debts do you have and what financial milestones did you intend to reach? Reassessment can help you maximize the extra money from student loan forgiveness. »

Almost every expert has recommended setting up an emergency savings fund if you don’t already have one.

Also, start focusing the money on other debts. “Most people who would benefit significantly from student loan forgiveness will have many similar destinations for their money,” said Melanie Hanson, editor of EDI Refinance. “Whether they’re paying off car loans, medical debt or more student loans, or they’re starting to build their savings for home ownership, investing that money in long-term financial security is a good idea. idea.”

Student loans: Biden to appeal federal judge’s decision to cancel debt forgiveness program

Many experts have also suggested creating or starting retirement savings accounts. “Investing for the long term through index mutual funds and similar securities is a great idea here. Maximizing your 401(k) or IRA contributions is a good idea if you’re going this route,” Hanson said.

Putting more pre-tax dollars into a retirement account can also help if student borrowers face a third, more likely scenario.

Meeting in the Middle – A Likely Scenario for Many Borrowers

Full student loan forgiveness may not be the most likely scenario, according to many experts. “Somewhere between these two scenarios is the most likely scenario of some, but not all, of their student loan debt being forgiven. This canceled debt is taxable income at federal, state and local income tax levels on their tax returns for the calendar year in which it is cancelled,” Griffith said.

If this happens, borrowers should prepare for a larger than expected tax bill the year their student loan debt is forgiven. It may be a good idea to consult a tax accountant or tax lawyer to discuss ways to reduce tax liability.

What future borrowers can learn from student loan forgiveness

Hanson pointed out that even if the student loan forgiveness guidelines pass, they are still, essentially, putting a temporary band-aid on a larger problem.

“Until the actual costs paid by students to attend college come down, we will continue to produce deeply indebted graduates who will need financial assistance to succeed in our current economy,” she said. .

Take our survey: Do you think student loan debt should be forgiven?
More: How Gen Z plans to avoid student loans

Until then, Griffith advised, incoming students should research their options and evaluate their career choices before taking out loans to pay for their education. “If someone is borrowing money to pay for their education, that borrower should make sure that the program they want has sufficient probability of leading to immediate job opportunities after graduation with a sufficient increase in earnings to be able to pay off student loans in less than five years. If this is not the case, a different program should be considered,” he said.

More from GOBankingRates

]]>
Buy Now, Pay Later, Schemes Are Increasingly Becoming a Means of Financial Abuse, Report Says | Buy now, pay later https://smi-loan.com/buy-now-pay-later-schemes-are-increasingly-becoming-a-means-of-financial-abuse-report-says-buy-now-pay-later/ Tue, 15 Nov 2022 07:14:00 +0000 https://smi-loan.com/buy-now-pay-later-schemes-are-increasingly-becoming-a-means-of-financial-abuse-report-says-buy-now-pay-later/

It all started with Afterpay, says Phoebe*.

For four years, her former partner forced her to open 12 buy-now, pay-later accounts with different vendors, which he used to rack up more than $5,000 in debt on her behalf.

She said she tried to confront him about the debt, but had to be cautious due to the violence in the relationship.

“The minute I said anything, he got aggressive,” she said.

Buy-it-now, pay-later (BNPL) schemes have increasingly become a means of financial abuse due to the ease of opening accounts, according to a report from the Good Shepherda charity that supports women and girls who experience abuse and disadvantage.

A quarter of the 30 financial advisers surveyed said that at least half of the women seeking help had been forced into debt with the BNPL. And more than half said it has become more common than a year ago.

“We hear stories of customer service they want [the partner] could be stopped, that it was not possible to open one after the other, that someone would say no, ”said Dr Ros Russell, of Good Shepherd.

Phoebe, a mother of two, said she was living on income support payments of around $1,100 a fortnight at the time of the abuse.

She said she had a bad credit history after her partner forced her to get a credit card as a young adult.

“I don’t think I have a clean credit history at all, but yet I’ve still been approved for each of these purchases now, pay later [services]“, said Phoebe.

She said provider BNPL Zip increased her credit limit from $1,000 to $2,500 after her partner forced her to apply.

She said her partner used the programs for everyday consumer goods such as gas, groceries and cigarettes.

Because so much money was flowing out of her account to repay what he had borrowed in her name, she also had to use the schemes to afford the essentials.

“I used Afterpay to get Coles and Woolworths gift vouchers so I could go shopping because I was drowning in so much debt,” she said.

The report found that 84% of respondents said clients indebted to BNPL had tried to manage the debt by opening more BNPL accounts. Almost three-quarters said customers had missed essential payments, or reduced or waived essentials to enable repayment of BNPL’s debt.

After Phoebe approached Good Shepherd for help with her debt, she wrote to the companies to explain her situation. All but one have now forgiven their debt.

“We didn’t actually ask for it to be erased, but they did,” she said.

The report says BNPL schemes exploit financial vulnerability, but also close gaps in social protection by supplementing low benefits.

Several welfare recipients told Guardian Australia they had used BNPL’s services to buy groceries, medicine and clothes. It had become more common as the cost of living rises.

The report recommends increased income support payments and the payment to escape domestic violence as well as stricter regulation of BNPL services.

A Zip spokesperson said it performs credit and identity checks on all applicants, as well as bank links that flag whether a client is in debt with other BNPL suppliers. The company has also worked with Good Shepherd to strengthen its family and domestic support policy and to train staff to identify any issues.

“Because the checks we run are compliant or, in some cases, stronger than other forms of credit, we don’t see high account opening rates as evidence of financial abuse,” said one. spokesperson.

A spokesperson for Afterpay said it does not tolerate any form of financial abuse and has taken a number of steps to limit customers’ exposure to potential financial vulnerability.

Afterpay does not perform credit checks, but has a policy of freezing a customer’s account as soon as a payment is missed, and undertakes an assessment of fraud and the customer’s ability to make refunds each time purchase. A spokesperson said these standards go beyond traditional credit products.

“It is important to note that BNPL can be used as an umbrella term for a multitude of providers with very different offerings. Afterpay’s model is very unique and differentiated in this group,” the spokesperson said.

Zip and Afterpay have adopted the Buy Now Pay Later voluntary code of practice which provides a standard of consumer protection, but a number of BNPL services have not signed it.

* The name has been changed for legal reasons

]]>